In 2006, mentalist Derren Brown succeeded in playing 9 top-tier chess players, simultaneously. Despite admitting at the beginning of his feat that he was a middling amateur player at best, Brown emerged with a winning 4-2-3 record, toppling several grandmasters in the process. You can watch the full video of his feat below.
How did he do it? As Brown reveals in the above clip (spoilers coming!), rather than trying to compete against each player on merit, he orchestrated the experiment such that eight of the nine players were, essentially, playing against each other. Brown observed the opening moves from his first game and played the same opening against an opponent across the room; when his opponent countered, Brown used the same counter in his first game. In this way, Brown beat some of the game’s elite players with nothing more than a remarkable memory, playing chess by proxy.
I’ve found a similar technique to be useful in venture investing. Given the breadth of sectors generalist funds cover, and the small teams relied upon, there are an abundance of deals assessed without direct industry experience or expertise. This is particularly true for VCs at the beginning of their careers, before sector specializations have been truly developed.
In order to ensure each deal is assessed fairly, investors often supplement their own research with the opinions of “information leaders.” These individuals are usually industry veterans, sectoral-specific investors, or founders of companies in the same space; in short, individuals able to assess technical deals with much greater subtlety and nuance. They raise the right questions, explain key concepts, and make note of the red flags that the investor might have missed. In many ways, they allow the investor to play a game of chess by proxy, offering exogenous expertise that can be used in further conversations with a founder, propelling a conversation forward from afar. They may do this several times during the course of conducting diligence on a deal.
There is a difference between Brown’s experiment and the job of a venture investor, of course. Whereas Brown sought to compete (and ultimately defeat) those he played against, the goal for an investor is much more collaborative, mutualistic. Investors aren’t looking to sneak in a ringer to help them win, rather they’re hoping to leverage the experience of a trusted advisor to better understand the business at hand. For both investors and founders, that leads to better, fairer outcomes.
And, what about that ninth player Brown competed against? Well, Brown chose to play him head on. And he won. Not bad for an amateur…